Expat Guide: Managing Salary Across Currencies

The Expat Currency Juggling Act

Moving abroad for work introduces a layer of financial complexity that most people are unprepared for. Whether you are earning in Japanese Yen while maintaining a mortgage in US Dollars, receiving a salary in British Pounds while supporting family in Philippine Pesos, or getting paid in Euros while saving for retirement in your home currency — managing salary across currencies requires a deliberate strategy.

Without one, you could lose 3-7% of your take-home pay to unnecessary conversion fees, poor timing, and suboptimal account structures. On a $100,000 annual salary, that is $3,000-7,000 per year disappearing into bank margins and conversion costs.

Understanding Your Currency Flows

Map Your Money Movements

The first step is identifying all the currency flows in your life:

Incoming:

• Primary salary (in which currency?)
• Bonuses and equity compensation
• Rental income from home country property
• Investment returns
• Spouse's income (if applicable)

Outgoing in host country:

• Rent/mortgage
• Daily living expenses
• Local taxes
• Local savings/investments
• Children's education fees

Outgoing in home country:

• Mortgage or rent on kept property
• Loan repayments
• Insurance premiums
• Family support/remittances
• Retirement contributions
• Investment contributions
• Tax obligations

Once mapped, you can see exactly how much needs to flow between currencies each month and plan accordingly.

Example: US Expat Working in Germany

Flow	Currency	Monthly Amount
Salary received	EUR	€7,500
German expenses	EUR	€4,000
US mortgage	USD	$2,200
US retirement savings	USD	$500
US student loan	USD	$350
Total USD needed	USD	$3,050
EUR remaining after conversion	EUR	~€700 savings

This expat needs to convert approximately €2,800 to $3,050 USD each month, making the exchange rate and conversion fees critically important.

Salary Payment Options

Option 1: Single Currency Salary

Most common for locally hired expats. You receive your entire salary in the host country's currency and are responsible for converting what you need to send home.

Pros: Simple payroll, straightforward local taxes Cons: Full currency risk on home-country obligations, conversion fees on every transfer

Option 2: Split Salary (Two Currencies)

Some multinational employers offer to pay part of your salary in your home currency and part in the local currency. This is more common in structured expat packages.

Pros: Reduced conversion need, partial currency risk mitigation Cons: Complex tax implications, employer may use unfavorable internal rates

Important: If your employer offers a split salary, ask what exchange rate they use for the conversion. Some companies use the mid-market rate, which is ideal. Others use rates 1-3% off mid-market, which may make it better to take the full salary in one currency and convert yourself using Wise.

Option 3: Home Currency Salary with Local Allowance

Common in traditional expat packages for senior or executive roles. Your salary stays in your home currency, and you receive a local living allowance or stipend in the host country's currency.

Pros: Minimal currency risk on your base salary, employer handles local allowance Cons: Less common, tied to specific company policies

Option 4: USD-Denominated Salary (Global Payroll)

Some international companies pay all employees in USD regardless of location. This is increasingly common in tech and remote-first companies.

Pros: Consistent, predictable income in a stable currency Cons: Full currency risk on local expenses, must convert for all local spending

Optimizing Currency Conversion

The Monthly Transfer Strategy

For most expats, the best approach is a systematic monthly transfer:

1. Receive full salary in host-country currency
2. Pay local expenses from local account
3. Transfer a fixed amount to home country on a set schedule
4. Use Wise or OFX for the conversion (not your bank)

Cost Comparison: $3,000 Monthly Transfer

Method	Monthly Fee	Rate Markup	Monthly Cost	Annual Cost
Wise	~$8	0.4%	~$20	~$240
OFX	$0	0.5%	~$15	~$180
Revolut Premium	$0	0% (weekday)	~$10	~$120
Bank wire	$30-50	2-3%	~$90-140	~$1,080-1,680
PayPal	$0	3.5%	~$105	~$1,260

Savings from switching from bank wire to Wise: $840-1,440 per year

Timing Your Transfers

Should you convert all at once monthly, or split it up?

Monthly lump sum: Simpler to manage, one fee per month. Best when rates are stable.

Biweekly or weekly: Spreads currency risk through dollar-cost averaging. Slightly more fees but reduces the impact of a single bad rate day. Best when rates are volatile.

Rate alert approach: Set target rates and convert when favorable. Can save money but requires attention and may not align with your payment deadlines. Best for flexible obligations.

Forward contracts: Lock in today's rate for a future transfer. Available through OFX and Wise Business for larger amounts. Best for predictable large transfers (mortgage payments, school fees).

Automated Transfers

Both Wise and Revolut offer scheduled recurring transfers. Set up automatic monthly conversions to reduce the mental overhead and ensure bills are paid on time regardless of where you are or how busy work gets.

Tax Implications

General Principles (Consult a Tax Professional)

Expat taxes are among the most complex individual tax situations. Key considerations:

Home Country Tax Obligations:

• US citizens and green card holders owe US tax on worldwide income regardless of where they live
• Many other countries cease tax claims once you establish tax residency elsewhere
• Double taxation treaties prevent being taxed twice on the same income (in most cases)
• Foreign Earned Income Exclusion (US): up to ~$126,500 of foreign earnings may be excluded (2025)
• Foreign Tax Credit (US): taxes paid abroad can offset US tax liability

Host Country Tax Obligations:

• You will likely owe income tax in your host country
• Tax rates, brackets, and deductions vary enormously
• Social security contributions may be required
• Some expat packages include tax equalization (employer covers the difference)

Currency Conversion and Taxes:

• The IRS requires US taxpayers to report income in USD, even if earned in foreign currency
• Exchange rate gains or losses on foreign currency can be taxable events
• Keep records of all conversion rates and dates

Recommended: Hire a tax professional who specializes in expat taxation. The fees ($500-2,000 per year) are almost always offset by the tax savings they identify.

Account Structure for Expats

Recommended Setup

Minimum setup (short-term assignment, 1-2 years):

1. Home country bank account (maintain existing)
2. Wise multi-currency account (conversion hub)
3. Host country bank account (salary receipt, local payments)

Comprehensive setup (long-term or permanent move):

1. Home country bank account (maintained for domestic obligations)
2. Wise multi-currency account (conversion and international transfers)
3. Host country bank account (salary, daily expenses)
4. Host country investment/savings account (local retirement, savings)
5. International brokerage account (investment diversification)

What to Do with Your Home Country Accounts

Keep open:

• Primary checking account (for recurring payments)
• Credit cards (to maintain credit score)
• Retirement accounts (continue contributing if possible)
• Investment accounts

Consider closing:

• Savings accounts with minimal balance or fees
• Secondary credit cards you never use
• Accounts with monthly maintenance fees you cannot justify

Protecting Against Currency Risk

Hedging Strategies for Expats

Currency risk is real. A 10% move in the exchange rate can significantly impact your monthly budget and long-term savings. Consider these approaches:

Natural hedging: Match your currency earnings to your currency expenses as closely as possible. If you earn EUR and spend EUR, there is no conversion risk on that portion.

Diversified savings: Save in multiple currencies rather than converting everything to one. This reduces your exposure to any single currency's movements.

Forward contracts: For large, predictable payments (school tuition, mortgage), lock in exchange rates months in advance through services like OFX.

Regular conversion schedule: Dollar-cost averaging your conversions smooths out rate volatility.

When the Rate Moves Against You

If your host currency weakens significantly against your home currency (making your home obligations more expensive):

• Review your budget and identify areas to cut
• Consider increasing the share of income you convert immediately
• Look into forward contracts to protect against further deterioration
• Discuss with your employer whether a cost-of-living adjustment is possible

Returning Home: The Repatriation Financial Plan

6 Months Before Return

• Start converting host-country savings back to home currency in batches
• Notify your host-country bank of your departure timeline
• Begin closing or transitioning local accounts
• Settle any outstanding tax obligations in the host country

3 Months Before Return

• Transfer the bulk of savings to your home-country account
• Cancel local subscriptions and services
• Ensure all recurring transfers are rescheduled or cancelled
• Request final tax documents from host-country employer

After Return

• Close host-country bank accounts (unless you may return)
• File final tax returns in the host country
• Update all financial institutions with your new address
• Review and adjust your currency diversification strategy

Key Takeaways

Managing salary across currencies is an ongoing process, not a one-time setup. Build a robust account structure (home account + multi-currency hub + local account), use low-cost transfer services instead of bank wires, and systematize your monthly conversions. The annual savings from optimizing your currency management can amount to $1,000-2,000 or more — money better spent on enjoying your life abroad.

Track exchange rates for your specific currency pair and make informed conversion decisions using the converter at hwanyul.com.